Fidelity National Information Services Reports Weak Third Quarter

Narrow-moat Fidelity National Information Services reported a difficult third quarter, as the company continues to lag its peers. Overall revenue was up 5% year over year on an organic basis, and the company saw a decline in margins, with management pointing to some macro factors that have started to pressure growth and margins. All in all, the near-term environment for the firm appears to be relatively difficult. After reviewing our assumptions, we expect to reduce our fair value estimate to $128 from $137 per share. While we appreciate the near-term headwinds the company is seeing, we still see the shares as materially undervalued from a long-term perspective.